December 16, 2021, 10:03 am EST
Questionable Responses After Fed’s Decision
Fed Chairman Jerome Powell announced its statement yesterday to reduce its asset purchasing program from $120 billion to $30 billion per month. Another important point is that raising its interest rates is likely to happen about three times in 2022 in order to fight inflation.
Dow Jones went to +380 points or +1% and Nasdaq reached about +2% gains as the result.
It was a big gain that brought major indexes back to a near all-time high level again like S&P 500. But, it is questionable about market responses because there is not much news from market expectation based on these statements. Tapering, raising rates, and inflation are well-known and there is not anything that surprised the markets. Therefore, this rally may not be sustainable. Perhaps, markets expected Fed to be more aggressive but it did not.
Anyway, we still hold cautious viewpoints about the future. The debt, rates, hyperinflation, COVD-19, China are still the main themes of 2022 that make economic recovery difficult along the way.